Austin Mackell writes:
In a recent TV discussion, Hossam el-Hamalawy, the prominent Egyptian leftist blogger, was asked: “So you’re the president of Egypt. You wake up, what’s the first thing you’re going to do to reorient the economy?”
Hamalawy’s answer was admirably concrete: raise the minimum wage to 1,200 Egyptian pounds ($198) per month, set a wage ceiling of 15,000 pounds ($2,480), renationalise the corruptly privatised factories, cut military spending and redirect those funds to health and education.
That a Marxist should suggest such steps is not surprising, but in Egypt they have now entered the mainstream. Neoliberal economic policies were thoroughly tried under the Mubarak regime, and demonstrably failed.
In 2008 the World Bank named Egypt as its “top reformer”. Mubarak’s adherence to the Washington Consensus strategies, however, delivered prosperity only for the already affluent elite. Meanwhile, the quality of life for the rest of the country deteriorated. This has not been lost on Egyptians.
In a recent conversation, Ahmed Attiya, a journalist for the Egyptian daily al-Shorouk – who describes his own politics as centre-right – put it to me that “even the conservative liberals nowadays support income taxes and minimum wages”, adding that “social justice measures are on the agenda of every Egyptian party I have heard of”.
Even the interim cabinet seems to get it. In March, as part his first TV address as interim prime minister, Essam Sharaf affirmed social justice, along with freedom and democracy, as one of the main principles of the revolution. These words have been accompanied by at least some action – one example being tentative moves to reform Egypt’s regressive income tax.
The old system (typical of tax policy in the region) was basically flat, with a top rate of 20%. This put an unfair burden on society’s lower ranks and allowed those at the top to accumulate massive fortunes. These fortunes in turn drove rampant inflation which, combined with a 10% sales tax, put an ever-increasing strain on the spending power of the poor. Meanwhile, the public health and education systems fell apart.
The changes made so far are small – the tax-free threshold has been lifted slightly and the top rate raised to 25% – but they are an indication that Egypt’s political class know which way they are supposed to be moving.